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Mike Pero Mortgages and Infometrics reported their Property Cycle Indicator (PCI) fell in the month of December for the first time in almost two years as the number of houses sold and the time taken to sell the houses deteriorated.  The PCI is a forward looking indicator that includes the number of houses sold, the time taken to sell a house and the changes in prices.

However, Mike Pero Mortgages Chief Executive Shaun Riley said the housing market remained in expansionary territory and he pointed to a rise in the median house price in December. Infometrics forecast in August last year that house prices would rise 24% in the next three years.

Here is the full release below.

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New Zealand’s housing market picked up momentum in August, the Mike Pero Mortgages-Infometrics Property Cycle Indicator shows. The indicator is based on changes in three Real Estate Institute of New Zealand (REINZ) figures: Days to sell, median sale price and number of house sales.

The Property Cycle Indicator runs from minus 10 to plus 10 and recorded 6.68 in August, from 5.93 in July.

Mike Pero Mortgages Chief Executive Shaun Riley said the rate of turnover in the housing market was the fastest in almost two years.

“In August houses took on average 34 days to sell (21 days fewer than in August 2008) and three days better than the 37 days taken in July 2009 (24 days fewer than in July 2008).”

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A housing market measure based on Real Estate Institute of New Zealand (REINZ) figures shows New Zealand’s housing market continued to rebound in July as the REINZ’s ‘days to sell’ figure fell from June.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI) rose to 5.95 in July from 3.98 in June. The PCI is based on changes in the amount of houses sold, changes in price and the time taken for houses to sell.

“The biggest change in the market is the much shorter time houses are taking to sell,” Mike Pero Mortgages CEO Shaun Riley said. The REINZ’s days to sell figure was 37 in July from 41 in June and 58 in July 2008. The median sale price remained at NZ$340,000, while the number of house sale fell slightly over the month to 6,014.

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An article by Tina Law in the Press has highlighted that Westpac has been offering home loans at up to 90% of a property’s value. Mortgage brokers have also reported other banks lending more than 80%, Law said.

New Zealand’s banks tightened home loan lending ratios in late 2008 as the global financial crisis worsened a slump in the property market. Many banks dropped their 100% lending offers and moved to 80% being the maximum loan to value ratio.

Here are some cuts from the article. We welcome your thoughts and comments below.

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New Zealand banks and wholesale mortgage lenders are tightening credit criteria, pulling longer term loan offers and hiking rates for riskier lenders in a further extension of the Credit Crunch sweeping the globe.

Mortgage brokers say banks have reduced loan to value ratio limits, increased margins for ‘low-doc’ (riskier) loans, tightened the pool of professions that can be lent to and in some cases removed fixed rate mortgages altogether. A low-doc loan is granted to a borrower without documentation of income. They are often used by self-employed borrowers or those operating as traders.

“Those looking for finance must realise that the rules have changed and lenders are imposing more stringent conditions. Expect further tightening in credit conditions,” said William Cairns at mortgage broker Cairns Lockie.

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Geneva Finance Chief Executive Shaun Riley is stepping down to take over from Sandra Pigram as Chief Executive of Mike Pero Mortgages, which is half owned by NZF Group.